01/04/12 – NACSO - Washington Alert:
President Obama moved forward today in recess appointing Richard Cordray to lead the new Consumer Financial Protection Bureau (CFPB). This appointment is controversial because Senate republicans blocked confirmation in the Senate expressing concerns about the super-power of the CFPB and challenges to the structure. Many Republicans believe empowering one director instead of a commission creates potential overreaching and excessive regulation.
In October, a NACSO delegation met with senior CFPB officials. While the Federal Trade Commission retained jurisdiction of the Credit Repair Organizations Act (CROA), as part of the Dodd-Frank regulatory shift, the CFPB is now charged with overseeing credit information (credit bureaus, consumer reporting agencies), collections and deposit markets. CFPB may also pursue businesses on allegations of "deceptive or unfair practices". The CFPB's first report issued to Congress, entitled, "The impact of differences consumer- and creditor-purchased credit scores.
NACSO welcomes the opportunity to work with all regulators and consumer groups to ensure consumers have access to legitimate, professional credit repair services.
MarketWatch Report:
Obama to recess-appoint Cordray to CFPB
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) - President Barack Obama will announce Wednesday that he plans to use a rarely-used presidential maneuver to appoint his candidate to run a controversial new consumer watchdog bureau, bypassing Republican opposition in the Senate and opening the door to legal and political attacks at the agency.
Obama plans to recess-appoint former Ohio Attorney General Richard Cordray to head the Consumer Financial Protection Agency, according to White House spokesman Dan Pfeiffer. Obama is visiting Cleveland Wednesday and will deliver a speech in the key battleground state this afternoon.
U.S. President Barack Obama spoke last month about the Republican obstruction of Richard Cordray's nomination to head the Consumer Financial Protection Bureau. Obama plans to recess-appoint him, a White House spokesman said.
The White House has decided to resort to such an approach because Senate Republicans have been blocking the traditional approval process for the CFPB chief, arguing that changes to the structure of the bureau must take place before any nominee is approved. Cordray did not receive the filibuster-proof 60 votes he needed to be approved by the Senate.
To appoint Cordray to the position, Obama will need to find a time when Congress is in recess. Republicans have set up so-called "pro-forma" daily legislative sessions of Congress seeking to block the White House from making the appointment. The White House's Pfeiffer on Wednesday called the "pro-forma" sessions a gimmick. He argued that they do not override the President's 'constitutional authority" to make appointments.
Nevertheless, Republicans were quick to respond to the tactic. Obama's plan to appoint Cordray is an arrogant circumvention of the American people, Senate Republican Leader Mitch McConnell said.
"This recess appointment represents a sharp departure from a long-standing precedent that has limited the President to recess appointments only when the Senate is in a recess of 10 days or longer," McConnell said in a statement.
It is unclear when Obama will formally appoint Cordray, but he is likely to have various opportunities between the daily legislative sessions throughout the first half of 2012 to do so.
Obama also is expected to announce other recess appointments Wednesday, according to the Associated Press.
Obama could also order the Senate into a recess, something no president has ever done.
Senate Banking Committee Chairman Tim Johnson, Democrat of South Dakota, said Wednesday he looks forward to Cordray implementing "long overdue" consumer financial protections for Americans.
"It's disappointing that Senate Republicans denied him an up-or-down vote, especially when it's clear he had the support of a majority of the Senate," Johnson said.
Without a Senate-confirmed chief, analysts insist that rules approved by the CFPB would be subject to legal controversy.
"It would leave the CFPB under constant political and legal attack for the next 12 months. That could really stymie what can get done," said Guggenheim Securities LLC analyst Jaret Seiberg.
The Dodd-Frank Act, approved in response to the financial crisis of 2008, created the CFPB because of a failure by bank regulators to prohibit the creation of subprime mortgages central to the meltdown. The CFPB is responsible for writing rules for mortgages, credit cards and other consumer credit products. Without a confirmed director, the bureau has been prohibited from overseeing a large swath of the consumer credit product industry. Without a director, the agency hasn't been permitted to write rules for mortgages and other consumer credit products.
Without a director, the bureau has had little authority over banks and nonbank firms that, in the run-up to the 2008 financial crisis, escaped regulation of any sort. These nonbank firms include payday lenders - which offer cash loans at steep fees to typically low-income individuals - mortgage-modification consultants and smaller state and local mortgage brokers, many of which originated "toxic" subprime mortgages that set the stage for the crisis of 2008.
Guggenheim's Seiberg said he questioned how negative the appointment will be for pay-day lenders and other non-banks, noting that with a recess-appointed director, "everything" the agency does could be under a legal cloud.
Top Republicans have insisted that they are not opposed to Cordray, but they are upset about the structure of the bureau and its funding.
Sen. Richard Shelby, the top Republican on the Senate Banking Committee, said having only one person in charge of the bureau would make it too powerful.
